France now looks to be the latest country to move away from the dollar as China is busy signing up countries to a currency swap line etc. Further evidence that the dollar will hold a much more minor role in future. Some countries to have signed up in the last few years are :

France intends to set up a currency swap line with China to make Paris a major offshore yuan trading hub in Europe, competing against London, the China Daily on Saturday cited Bank of France Governor Christian Noyer as saying.

Yuan deposits in Paris amount to 10 billion yuan ($1.6 billion), making it the second largest pool for the Chinese currency in Europe after London. Almost 10 percent of Sino-French trade is settled in yuan, also called the renminbi or RMB, according to French data cited by the official newspaper.

“The Bank of France has been working on ways to develop a RMB liquidity safety net in the euro area with due consideration of a supporting currency swap agreement with the People’s Bank of China,” Noyer told the English-language newspaper.

The yuan’s internationalization and bilateral financial cooperation could be among the main topics during French President Francois Hollande’s visit to China in late April, the paper said.

French Foreign Minister Laurent Fabius paid a two-day visit to Beijing this week.

The planned swap line would be the latest in a string of bilateral currency agreements that China has signed in the past three years to promote use of the yuan in trade and investment.

It followed a similar step by the Bank of England to set up a reciprocal three-year yuan-sterling swap line with China.

Share this:

Like this:

The French Minister of Labour let the cat out of the bag and admitting France is bankrupt. Funny to see Hollande trying to put the cat back in. We can’t have the truth getting out there 😉

Things in France must not be very serious, because the French labor minister accidentally let the truth come out a little earlier today. As the Telegraph reports, France’s labour minister sent the country into a state of shock on Monday after he described the nation as “totally bankrupt.“

Remember: France is one of the supposedly stable countries in Europe.

“Michel Sapin made the gaffe in a radio interview, which left French President Francois Hollande battling to undo the potential reputational damage. “There is a state but it is a totally bankrupt state,” Mr Sapin said. “That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.” It appears that once one wipes out the propaganda and the smooth politico talk, things are bad and getting worse at Europe’s core. “Data from Banque de France showed earlier this month that a flight of capital has already left the country amid concerns that France’s Socialist leader intends to soak the rich and businesses. The actor Gérard Depardieu has renounced his French citizenship and decamped to Russia in protest, while David Cameron said Britain will “roll out the red carpet” to attract wealthy individuals. Pierre Moscovici, the finance minister, said the comments by Mr Sapin were “inappropriate”.”

Share this:

Like this:

It hasn’t been long since the French Presidential election and dissatisfaction with Hollande is rife. The electorate these days want instant action to the pre-electionlies promises. Of course politicians only say what you want to hear to get in but usually it takes a lot longer for people to get this upset. Having said that, the french are not noted for their patience.

France is mired in a stagnating economy. The private sector is under pressure, auto manufacturing is heading into a depression. Unemployment hit a 13-year high of 10.2%, leaving over 3 million people out of work. Youth unemployment of 22.7%, bad as it is, belies the catastrophic jobs situation for young people in ghetto-like enclaves, such as the northern suburbs of Paris. The “solution”—fabricating 150,000 jobs for the young at taxpayers’ expense—has been tried before, with little success. Gasoline and diesel prices are hovering near record highs. So there are a lot of very unhappy campers.

In a BVA poll, 55% of the respondents were dissatisfied with President François Hollande’s efforts to tackle the economic crisis. By comparison, only 31% were dissatisfied with Nicolas Sarkozy in 2007 at the end of his honeymoon. Devastatingly, for a socialist: 57% believed that he didn’t distribute the “efforts” equitably—same as Sarkozy, the president of the rich.

People are desperate for solutions now but Hollande is failing to deliver fast enough.

The problem with voters is Hollande’s “inaction,” after some initial half-measures, such as the partial reinstatement of retirement at 60 and raising back-to-school aid for families. Now people “seriously doubt his ability to change things.” They believe that the government spends its time trying to “unravel Sarkozy’s legacy” and “sitting around in meetings,” rather than making decisions.

In an OpinionWay poll, satisfaction with the job Hollande is doing crashed a vertigo-inducing 14 points from 60% in July to 46% in September—compared to the 64% satisfaction score voters heaped on Sarkozy in 2007. And 58% believed Hollande, after four months in office, is already going “in the wrong direction.”

People have the “strange impression” that the government is “only now becoming aware of the crisis,” and they’re worried that the government lacks “clear vision” and “a war plan” to combat it, said Bruno Jeanbart, deputy general director of OpinionWay. Anxiety is engulfing the middle class, and it pummeled Hollande with a 19-point drop in the satisfaction score. During his campaign he’d promised that he’d demand “efforts” from the rich and from large corporations, but now the middle class fears that it will be asked to step up to the plate and pay even more in taxes.

Hollande was so worried, he took to the tv screens to try to appease the people.

To turn things around, Hollande addressed the nation on Sunday night TV (TF1) … and lowered growth expectations for 2012 from the already measly 1.2% to 0.8%. To keep the deficit in line, he’d have to come up with €33 billion in new measures. He’d “save” €10 billion in public service—though he’d already committed to hiring more civil servants for education, law enforcement, and the decrepit justice system. Deep unnamed cuts would have to be made elsewhere. A mystery, because the resulting strikes would paralyze France for weeks.

And he outlined tax measures, some of which he’d already proposed during his campaign, to extract another €20 billion from households and businesses—the 75% top income tax bracket among them. Once again, he emphasized to his incredulous middle-class compatriots that these taxes would hit only the largest corporations and richest households.

Already his policies are causing problems with the predictable result of the wealthy avoiding the tax hikes by taking a hike. Who could have forseen that one coming?

Hence the explosive impact of the “affaire Arnault,” as it has come to be called. Bernard Arnault, richest man in France, fourth richest man in the world, top honcho at luxury retailer LVMH, and close associate of Sarkozy, has applied for Belgian citizenship.

France gasped. Liberation ran a front-page article, “Hit the Road, Rich Idiot.” It lambasted him for his tax-avoidance strategy and called him a “deserter.” Arnault decided to sue the paper. Economy Minister Pierre Moscovici said on BFMTV that he was “shocked” and called for renegotiation of the tax treaties with Belgium, Luxembourg, and Switzerland (unlike Americans, who are taxed on their worldwide income, French citizens are not taxed in France if they don’t live there).

Previously I spoke of bank restrictions in Italy in accessing your cash, now in France a similar story is now appearing. As reported by Max Keiser.com(from a reader) , that Banque Postal has stopped bank wires and cash transactions on Friday. It is interesting to see if this continues this week or will we be seeing more excuses here on in from banks for stopping customers from accessing their accounts.

Max

Banque Postal is in in very bad position (Dexia accounts) i received this and this friday and saturday

The mail says that my reader went to the bank in the morning and asked 250 euros the lady answered “i am sorry, i just have 180 euros”… The guy understood that his account had only 180 euros so he asked again : – ) she explained that she only had 500 euros to open her desk and 180 left !!! The reader made 3 Banks Postale before getting his money.

The picture below (taken by an another reader on friday in Maison-Alfort, parisian suburb) shows another Banque Postale saying that there will be no cash transaction on friday from 8h to 14h30 !

Other friends are reporting to me that (whatever bank) they are not able to do wires due to “computer technical problems blabla”) !

something big and dangerous is going on here in France with Bank Postale one of the most important banks of the country.

Like this:

John Maudlin writes on the BusinessInsider of his prediction finally coming true. Germany notoriously deadpan against printing money due to its experience of Weimar hyperinflation had no solutions left to turn to, other than turning on the printing press. After all the LTROs worked for a short period but weren’t enough.

The simple fact is that Mario Draghi, the Italian president of the ECB, created €1 trillion euros to help fund European banks, which promptly turned around and bought their respective countrys’ sovereign debt. Germany’s Angela Merkel forced the Bundesbank to “play nice” and go along with what was seen as the only way to solve a growing banking crisis in Europe. Everyone breathed a sigh of relief, thinking that this at least bought a year during which things could be sorted out. But it turns out that a trillion euros just doesn’t go as far as it used to. The “relief” lasted about a month. The last few weeks have presented yet another budding crisis, as least as large as the last one. Where to get the next trillion?

This week the German Bundesbank waved the white flag.The die is cast. For good or ill, Europe has embarked on a program that will require multiple trillions of euros of freshly minted money in order to maintain the eurozone. But the alternative, European leaders agree, is even worse. Today we will look at the recent German shift in policy, why it was so predictable, and what it means. This is a Ponzi scheme that makes Madoff look like a small-time street hustler. There is a lot to cover.

The plain truth.

It is the world’s worst-kept secret: Germany does not want inflation but wants to abandon the European Union even less. And as we will see, the eurozone simply does not have enough money to keep itself together without massive ECB intervention.

Bild and Spiegel Online ran with stories of inflation stoking up deep-seated fears and memories from days gone by. The Bundesbank came out with a statement to try to prepare the German people.

“The panic-mongering was prompted by a statement by a senior official from the Bundesbank, Germany’s central bank, to the finance committee of the German parliament earlier this week. Jens Ulbrich, head of the Bundesbank’s economics department, said that Germany is likely to have inflation rates ‘somewhat above the average within the European monetary union’ in the future and that the country might have to tolerate higher inflation for the sake of rebalancing national economies within the euro zone.

Maudlin continues with the state of the Spanish banks which are much worse than many realize.

I have been writing for almost two years about the fact that the cajas, or Spanish regional banks, are worse than bankrupt. US banks are shut down when their nonperforming loans are at 5% of their capital. Spanish banks are at 20% and rising rapidly. My coauthor Jonathan Tepper and I spent a whole chapter in Endgame on Spain, at the end of 2010. This week the Spanish government basically nationalized Bankia, the nation’s 4th largest bank, which had been cobbled together from seven failed cajas and given a large government guarantee and a €3 billion public-offering equity infusion. Only roughly half of its real estate loans are generating returns, and that is the number for public consumption.

The write downs are not enough and the eventual recapitalization will need to be extremely large.

“Aside from creating a financially unsound bank, the government also demanded an additional 30 billion euros worth of write-downs on loans – valuing 84 billion euros in total, when combined with the original requirement of 54 billion euros in write-downs. The combined write-down program is, however, unlikely to be sufficient to address the close to 180 billion euros in toxic assets held by Spanish banks. Furthermore, many of Spain’s struggling banks will be unable to maintain the core tier-one capital ratio required by EU regulations without the government’s assistance. Spanish banks will require an estimated 100 billion-250 billion euros in recapitalization later this year to reach this capital ratio target – a significant percentage of which will have to be shouldered by Madrid.

We are talking the need for new Spanish-government debt amounting to roughly 25% of GDP that will be needed just this year, and that’s if things don’t deteriorate beyond present assumptions in their real estate sector. Care to make a wager on how sound those assumptions are? About as sound as Rajoy’s assessment, only a few months ago, that no public money would be needed, perhaps?

Let’s do some basic math. Spanish banks took down some €352 billion in the LTRO (created by the ECB), or over 1/3 of the total amount. They have about €80 billion left after deposit outflows and buying sovereign debt. Which will be needed to buy yet more Spanish government debt, so they can be bailed out.

As near as I can tell, Spain is guaranteeing about $20 billion of the new IMF funds that will be used for a European bailout. Spain already has $332 billion of liabilities to the ECB, $125 billion to the stabilization fund, another $99 billion for something called the Macro Financial Asset Fund, and various guarantees for other bank and European funds, all of which totals over $600 billion, give or take. Their public debt-to-GDP ratio is only 69%, but add in these other guarantees and commitments and you get over 130% debt-to-GDP. And that is before they start bailing out their banks, and before any additional debt from their fiscal deficit, which is running at 8%.(Yes, I know they say it will be around 5%; but they are in a deepening recession; unemployment is rising at an alarmingly high rate, which lowers revenues and increases government spending; and their bond costs are rising).

So what state is France in?

“However, the fundamentals are much grimmer. France has not balanced its books since 1974. Public debt stands at 90% of GDP and rising. Public spending, at 56% of GDP, gobbles up a bigger chunk of output than in any other euro-zone country – more even than in Sweden. The banks are under-capitalized. Unemployment is higher than at any time since the late 1990s and has not fallen below 7% in nearly 30 years, creating chronic joblessness in the crime-ridden banlieues that ring France’s big cities. Exports are stagnating while they roar ahead in Germany. France now has the euro zone’s largest current-account deficit in nominal terms. Perhaps France could live on credit before the financial crisis, when borrowing was easy. Not anymore. Indeed, a sluggish and unreformed France might even find itself at the center of the next euro crisis.”

The banks of France are over 4 times the size of French GDP. The markets have been punishing the larger banks, with some of them down almost 90%.

While French banks are not the problem that Spanish banks are, they are far larger relative to the size of their home country. Even a small problem can be large for the country. And French banks have very large exposure to European peripheral debt. A default by Spain would push them (and a lot of other European banks) over the edge. Which is one reason that Sarkozy was so loudly insistent that any bank problems should be treated as a European problem and not the problem of the host country. (Interesting idea if you are Irish!) France simply cannot afford to deal with any problems in its banks while it is running such large deficits. And not while it is guaranteeing all sorts of European debt, which is at the heart of the problem. Germany needs France to help shoulder the financial burdens of Europe. And as long as France can keep its AAA rating, Germany has a partner. But if France loses that rating, then any European debt it guarantees clearly loses that rating as well.

S&P has already taken France down one notch to AA+ and still has a negative outlook. Moody’s has warned of a possible downgrade to France. Italy now has a BBB+ rating, just below that of Spain. When you look at the actual balance sheet and total debt, France is not all that far from further downgrades, unless it embraces a new budget ethic, which is precisely what Hollande has said he will not do.

That would be a real crisis for the eurozone. German voters might not be willing to shoulder the European burden without a full partner in France.

And there you have it, the reasons for the German u-turn.

Is there any wonder about the timing of the Bundesbank retreat? They looked at Greek and French elections and then at the ongoing Spanish crisis, which is trending from very bad to awful with a risk of horrific. They glanced at the balance sheets of their own banks and those of French banks vis-à-vis sovereign debt from peripheral Europe, then took a peek at German-voter polls and flipped through their own balance sheet, and decided that the only entity with enough money to stem the crisis was the ECB. And that means a “little” inflation.

I think the vast majority of Germans (and to be fair, the entire world) have no idea how many trillions of euros are going to be needed to keep patching the leaky ship that is the eurozone. It is even possible that most German politicians actually think it might only be 3% inflation.

Spain is too big to save and too big to fail. The only way for Spanish debt to remain at 6% is for the ECB to basically buy it (or lend to Spanish banks so they can buy it, or whatever creative new program Draghi and team can think up). When Spain goes, it is just a matter of time before we lose Italy and then, yes, even France. The line must be drawn with Spain. And the only outfit with a balance sheet big enough that can also do it in a politically acceptable manner is the ECB, and the only way they can do it is with a printing press.

Thanks for the hangover 😉

They will do whatever it takes to keep the European Union and eurozone together. And whatever it takes is a very open-ended plan. But it is going to cost them trillions of euros.

Someone is going to have to pay that bar bill. And there’s going to be one helluva hangover.

Like this:

On the eve of the French Presidential campaign, there is more news about the donation Gaddafi gave Sarkozy of €50million towards his presidential campaign in 2007. If true, it shows how ruthless Sarkozy was in return when you think of how he backed the war removal of Gaddafi.

A lawyer for Libya’s former Prime Minister Baghdadi Ali al-Mahmudi confirmed on Thursday that Gaddafi contributed over 50 million euros to Sarkozy’s 2007 election campaign.

Mahmudi is now reportedly in detention in Tunisia.

Earlier, the leftist French journal Mediapart published documentary evidence about the controversial funding source.

The report said of an agreement signed after an October 6, 2006 meeting attended by Gaddafi’s spy chief Abdullah Senussi, the head his African investment fund Bashir Saleh, close Sarkozy associate Brice Hortefeux and arms dealer Ziad Takieddine.

It claimed the 2006 document — allegedly signed by Gaddafi’s former intelligence chief and later foreign minister Moussa Koussa — were obtained “from the archives of the secret service” through former senior Libyan officials currently in hiding.

Sarkozy refuted the document as “crude forgery” and has lodged a lawsuit against the whistleblower website.

The allegations can seriously dash re-election hopes for Sarkozy, who lost the first round of presidential election to his Socialist rival Francois Hollande, given the French electoral rules that strictly ban politicians from receiving campaign contributions from foreign states.

The latest revelation by the Gaddafi ally comes as debates between Sarkozy and heat up ahead of the May 6 presidential runoff.

The Socialist hopeful has already called for an inquiry into suspected ties between Sarkozy and the former Libyan ruler.